Sebi directs Religares art fund to refund investors money

New Delhi, Jun 16 (PTI) Finding an art fund launched by Religare to be an unregistered collective investment scheme, markets regulator Sebi has asked the groups two firms to refund investors money within three months and prohibited them from carrying out such activities. The Securities and Exchange Board of India (Sebi) also warned of further action, including barring Religare Arts Investment Management Ltd from securities markets if it fails to comply with the orders for winding up of all its collective investment scheme (CIS) activities and refund the money to investors with due returns. The art fund, which had collected contributions through its scheme called Pratham during 2007-08, had said it had collected Rs 11.49 crore from 42 beneficiaries.

It further claimed to have voluntarily offered to return the initial contribution to all investors at the end of the term of the art fund in 2011 due to declining value.

Subsequently, out of the total 42 investors, 38 investors had accepted the offer and had received the respective principal amount in return, the company had told Sebi. However, Sebi found that at least four investors had incurred losses in their investment.

In an order, Sebi Whole Time Member Prashan Saran said, "It would be reasonable to direct Religare to make good the losses suffered by the said four investors... and to return their investments as was done in the case of 38 investors."

"Religare Arts Investment Management Ltd and Religare Arts Initiative Ltd shall refund the monies collected under its scheme with returns which are due to its investors... within a period of three months," Sebi said in an order dated June 15.

Thereafter, they are required to submit a compliance report to Sebi, including the trail of funds claimed to be refunded, bank account statements indicating refund to the investors and receipt from the investors acknowledging such refunds, within 15 days.

Besides, the regulator has restrained the firms from mobilising any money from the investors or launching any CIS.

Religare Arts Investment Management, a subsidiary of Religare Arts Initiative, had made an application in May 2008 seeking registration as a CIS.

The regulator found that Religare Arts Initiative was advising a private trust, which was engaged in managing an art fund. It asked Religare Arts Investment Management to explain the capacity in which Religare Art Initiative was engaged in managing an art fund without getting registered.

Religare Arts Investment Management had submitted a fresh application in August, 2008, for registration under CIS regulations. While the application was pending, it requested, in November 2008, for the issuance of registration certificate in order to enable it to launch new art fund.

Later in May 2013, the company had requested to withdraw the application for registration citing market conditions and its future business prospects. PTI SP BJ ABM

This is unedited, unformatted feed from the Press Trust of India wire.

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